WASHINGTON, July 16,
(AFP): Tiny new radio-emitting chips for tracking retail products
from factory to checkout represent a dream for retailers, but a
nightmare for privacy activists.

The so-called Radio
Frequency Identification chips, the size of a pinhead, could be
placed on anything from soup cans to sneakers.The chips could
eventually replace bar codes, which identify only a type of product,
with the ability to identify individual items and allow suppliers
and retailers to know exactly what is on their shelves or in
inventory.

Promoters of RFID said it can be a boon for
retailers, suppliers and others."Put a tag - a microchip with an
antenna - on a can of Coke, a pair of jeans, or a car axle, and
suddenly a computer can 'see' it," says a brochure from the
industry-funded Auto-ID Center at the Massachusetts Institute of
Technology.

"Put tags on every can of Coke, every pair of
jeans and every car axle, and suddenly the world changes. No more
inventory counts. No more lost or misdirected shipments. No more
guessing how much material is in the supply chain - or how much
product is on the store shelves."

Allied Business
Intelligence, a market research firm, estimates the global market
for the chips will grow to more than 3.1 billion dollars by
2008.The chips are being used by the US Department of Defense as
well as the world's largest retailers, including Wal-Mart, Metro AG,
Carrefour, Tesco, and Ahold, ABI noted.

But just as the chips
may help businesses, they could compromise individual privacy, say
activists who fear hidden chips will make it onto clothing,
accesories and auto parts.Katherine Albrecht of Consumers
Against Supermarket Privacy Invasion and Numbering says tracking
information would go into databases that could be on the Internet or
be made available to the government for its controversial Total
Information Awareness program to track terrorists.

"Anyone
can get access to a reader and figure out what's in people's
shopping bags, what kind of underwear they're wearing," Albrecht
said.The Electronic Privacy Information Center says the tags
"would create an Orwellian world where law enforcement officials and
nosy retailers could read the contents of a handbag - perhaps
without a person's knowledge - simply by installing RFID readers
nearby."

A number of companies are going full-speed ahead on
the technology. Gillette, the US razor and consumer goods maker,
ordered 500 million of the ID tags.

But other companies
appear to be backing off. Italian apparel giant Benetton, faced with
a boycott by privacy groups, issued a statement this year declaring
"that no microchips (Smart Labels) are present in the more than 100
million garments produced and sold throughout the world under its
brand names."Benetton said it was still studying the use of the
chips in garments but had made no final decision.

Wal-Mart
spokesman Tom Williams said the world's largest retailer has looked
at the possibility of using tags on individual items for a so-called
"smart shelves" program, but for now was only planning on using RFID
chips for inventory shipments on crates and boxes.